Investors fleeing low bank rates help lift Price profits 37 percent

April 30, 1993|By David Conn | David Conn,Staff Writer

As investors continue to abandon the low interest rates offered by banks and thrifts, investment companies such as Baltimore-based T. Rowe Price Associates Inc. reap the gains.

The company said yesterday it earned $10.2 million, or 67 cents a share, in the three months that ended March 31, a 37 percent increase over the $7.4 million, or 49 cents a share, earned a year earlier.

The mutual fund company's revenues of $68.7 million were 17.4 percent higher than during the first quarter of last year.

The main reason for the improved earnings was the fact that assets under management rose to $43.8 billion in the quarter, a $2.4 billion increase from the previous period and $7.4 billion higher than the first quarter of 1992.

"Fees earned on record assets under management were the primary contributor to the company's strong performance," George J. Collins, Price's chairman, president and chief executive, said in a statement.

Sales of Price's equity mutual funds are about to make April the company's second-best month in history, according to a spokesman.

But investors shouldn't expect to rely on that kind of growth forever, noted A. Michael Lipper, president of Lipper Analytical Services Inc., in Summit, N.J. Mutual fund sales in February and March were a bit weaker than in January, he said.

Individuals "should be investing in [the company's stock] for the long term," Mr. Lipper said.

Yesterday's results were about in line with analysts' predictions, even though the company had downplayed its own expectations at its annual meeting earlier this month. T. Rowe Price's stock rose 75 cents yesterday, to close at $42, in trading on the New York Stock Exchange.

Money spent on advertising and promotion, one of Price's costliest expense items, rose about $500,000 from the fourth quarter of last year, but was $1.6 million less than the year-ago quarter.

T.Rowe Price Associates Inc.

$

Ticker Yesterday's

Symbol Cls. Chg.

TROW ...........42 + 3/4

Period ended

March 31 1st qtr. Year ago Chg.

Revenue........$68,716 $58,548 +17.4%

Net Income.....$10,551 $7,441 +37.4%

Primary EPS....$0.67 $0.49 +36.7%

Figures in thousands (except per share data).

* Includes a net charge of 2 cents a share because of accounting changes.

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